The concept of the welfare state. German experience

Author : Dmytro Duma

16:54, 29 July 2016

The concept of the welfare state. German experience

Author : Dmytro Duma

The question about formation of the welfare state concept in Ukraine has been recently increased in media. The debate is getting a particular relevance in the context of last events: practical inefficiency of social reforms, aggravation of economic crisis and starting the process of formation new government. What is a “social state” and a mechanism of its functioning? We will try to understand it on the example of “pioneer-country” – Germany.

16:54, 29 July 2016

112 International

An example of Germany as a leader of development and implementation the concept of the welfare state. 

At first the concept of welfare state was used in 1929 by German scholar H. Geller. However, at the constitutional level the idea and values ​​of the welfare state were declared only after 20 years.

The welfare state in Germany is a combination of the capitalist method of production and a system of beliefs connected with the need to protect economic and social needs of all citizens. This is a “third way” which stands between the capitalist economy in its pure form and state economy fully. In Germany the social stability is guaranteed by labor legislation, collective agreements, participation of workers in companies’ management – social partnership.

In practice these ideas are based on the effective functioning of the social assistance systems which include social insurance, social compensation system and social security system. It should be noted that currently 29.7% of German GDP (812 billion euros) is integrated into the system of social assistance. For example, in 1960 this figure was only 18.3%.

Reforming of the state social security combines:

- Pension insurance. For example, 20.6 million pensioners are paid 25 million pensions. In pension insurance invest 52,4 million among employed people.

- Medical insurance. 70 million people are insured under a mandatory system and 12 million people are insured by private foundations.

- Unemployment insurance. The validity period is from 6 till 12 months. The basic rate of social payments - 399 € (for one person) / 360 € (for one family member).

- Insurance in case of loss a capacity and accident insurance. Now 25 million people in Germany require long-term care insurance to obtain. Their number will increase to 3.3 million by 2030 and up to 4.4 million by 2050.
A social compensation system aims to help young families, victims of war, victims of crime, political prisoners etc. In terms of social assistance for children, it consistsof 184 € for children up to 18/25 years, 190 € for third child and 215 € for fourth child. Since 2007 a “parental care” is paid during one year that is from 300 € to 1800 €, 12/14 months.

The social security system operates as a social assistance for basic material content of job seekers and as a support for social security and provision of social housing.

The author cites rates and percentages of social security contributions (1 January 2015) in order to make the picture of public social security system more clear.


Pension insurance

Medical insurance

Insurance in case of loss a capacity

Unemployment insurance

Total percentage of wage payments

Employer payments






Employee payments












It is worth noting that the concept of the welfare state has more than a centenary history of development. This concept has passed the evolutionary process of almost the utopian period to one of the basic principles of the constitution of most developed countries. The basis of the welfare state is the effective functioning of the social assistance system. One of the main elements of the welfare state in Germany is a balanced system of the state social insurance, which began to form since 1960 and now operates efficiently. The German system of the state social insurance includes a variety of support tools, motivation and control of labor activity of citizens. Therefore, the experience of this country could serve as a model for developing and implementing the concept of the welfare state in Ukraine.

Note: At the legislative level, the concept of the welfare state is contained in the constitutions of several European countries, namely Germany (since 1949), France (from 1958), Switzerland (since 1972), Greece (from 1973) and Ukraine (since 1996). Currently most developed countries in a varying degree are welfare states.

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